REQUIRED: (a) Determine whether there is any difference between accounting rule and tax rule in each of the above situation. Indicate whether it is taxable or deductible temporary difference or permanent difference. (b) Compute deferred tax asset and deferred tax liability (if any) for each of the above situation as at 31 December 2016. (c) Determine the amount of tax payable to IRB for year assessment 2016. Prepare the necessary journal entry.
Sufi Bhd (Sufi) is a technology start-up company, incorporated in Malaysia since year 2014. The company involves in providing information technology (IT) solutions and services. Sufi reported profit of RM42,000 for the financial year 2016. The following information are extracted from the financial accounting record of Sufi for the year ended 31 December 2016.
1. An IT equipment was bought in January 2014 for RM280,000. The company charged
2. A research and development cost amounted to RM25,000 incurred during year 2016 and qualified to be treated as intangible asset.
3. An interest revenue from investment in bond amounted to RM12,500 was earned during the year, but the amount is receivable in year 2017.
4. An entertainment expense of RM18,000 was paid to entertain new clients.
5. An interest expense amounted to RM29,200 was incurred due to borrowing from bank. Half of the amount is payable in year 2017.
6. A donation of RM5,000 was made to IRB approved charity fund organized by the local community during the year.
It is required by Malaysian law that each corporation must file in their income tax return form and compute tax payable to Inland Revenue Board (IRB) every year. Under tax rule, the equipment entitled capital allowance at a rate of 30% in the first year of operation and 10% in the remaining years. Given that tax rate applicable for year assessment 2016 is 25%.
REQUIRED:
(a) Determine whether there is any difference between accounting rule and tax rule in each of the above situation. Indicate whether it is taxable or deductible temporary difference or permanent difference.
(b) Compute
(c) Determine the amount of tax payable to IRB for year assessment 2016. Prepare the necessary
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